U.S. accuses Ryan fund, 2 ex-aides of corruption

A former top aide to Gov. George Ryan led a political operation on Ryan's behalf that engaged in pervasive fraud for seven years, diverting state employees to work on numerous campaigns on state time, shredding garbage bags full of campaign records and thwarting an internal investigation of wrongdoing, a sweeping federal indictment charged Tuesday.

Reaching anew into Ryan's inner circle, authorities charged that Scott Fawell, longtime chief of staff to Ryan when he was secretary of state, oversaw the systematic corruption, accepting more than $10,000, several free vacations and the services of a prostitute in return for awarding a contract to a former state legislator.

Fawell, who managed Ryan's 1998 governor's campaign, also was alleged to have awarded low-digit license plates to at least two political contributors.

The 10-count indictment represents a new and significant turn for the 4-year-old federal Operation Safe Road probe of wrongdoing during Ryan's tenure as secretary of state.

In addition to Fawell, the Citizens for Ryan campaign committee was charged with wrongdoing, and prosecutors announced they intend to seek forfeiture of at least $1 million in allegedly ill-gotten proceeds from the committee. If convicted, Ryan's campaign fund could face fines of up to an additional $1.5 million, authorities said.

At a packed news conference in Chicago, U.S. Atty. Patrick J. Fitzgerald said the indictment represented the first time a political campaign committee had been indicted for racketeering. Only two other campaigns--the Committee to Re-Elect the President, Richard Nixon's 1972 campaign, and a presidential bid by Lyndon LaRouche--had been charged with federal criminal misconduct, Fitzgerald said.

Authorities said a former Ryan campaign insider, Richard Juliano, who worked closely with Fawell, has been cooperating for months and will testify for the government at trial. Juliano was charged Tuesday with one count of mail fraud.

Ryan said that the government "wants to hold the campaign fund responsible for actions that it said were done by others. The courts will decide if this is a proper application of the law.

"There is no question today's charges have been the subject of gossip for some time," he said. "Now these cases are in the courts where they belong."

Ryan was not accused of any wrongdoing.

According to the charges, widespread misuse of state employees took place not only in Ryan's campaign for secretary of state in 1994 and his campaign for governor in 1998, but also in the 1994 primary campaign of a state senator. The indictment doesn't name the senator, though sources identified her as Fawell's mother, former state Sen. Beverly Fawell.

The charges also say the workers were used in several state House races in 1996 and in a 1996 presidential primary campaign sources said was that of U.S. Sen. Phil Gramm (R-Texas), whom Ryan supported.

Beverly Fawell and Gramm weren't accused of any wrongdoing.

Secretary of state employees were diverted to work on the campaigns on state time and rewarded with raises and promotions, the charges allege.

The charges allege that Ryan's campaign committee destroyed incriminating documents by shredding, burning and discarding them and that the wholesale destruction took place in secretary of state and campaign offices in Chicago and Springfield.

The wide-ranging indictment also alleges that Fawell essentially dismantled the secretary of state's inspector general's office in the mid-1990s to thwart internal investigations of the link between license selling and improper Ryan campaign fundraising efforts in driver's license facilities in suburban Libertyville, Naperville and McCook.

Among the scuttled investigations was that of truck driver Ricardo Guzman, who authorities say illegally bought his truck driver's license at McCook and was later involved in a fiery crash near Milwaukee that killed six children.

The charges allege that Fawell fired or reassigned several inspector general investigators to discourage the internal probes. In addition, in an internal memo he allegedly stated his intention to dismantle the inspector general's office in part to prevent investigations into the Ryan campaign fundraising activities, the indictment charges.

Authorities allege Fawell personally profited from the scheme. The indictment charges he struck a lucrative deal with an undisclosed vendor--identified by a well-placed source as Roger C. Stanley, a former state legislator.

In 1994 Fawell awarded to Stanley a $229,000 contract to market the secretary of state's organ donor program, though a Chicago Heights firm was used as a front to conceal Stanley's involvement, the charges allege.

In fall 1996, Stanley paid $10,000 to Fawell and an additional $90,000 to other state employees who worked as campaign coordinators for several GOP candidates in the 1996 state House races, the indictment alleges.

Fawell also is accused of splitting an additional $30,000 from Stanley with Juliano and a third undisclosed individual for assisting in Gramm's presidential primary bid in Illinois in 1996.

Fawell also is charged with accepting free or heavily subsidized vacations from Stanley to Costa Rica, Door County in Wisconsin and Lake Ontario in Canada. The Costa Rican trip included "prostitution services," the indictment alleges.

In addition to the organ donor contract, Stanley is alleged to have been given a ghost-payrolling job in the secretary of state's office for less than two months to sweeten his state pension.

The latest charges arising from the scandal represent a severe blow to a Republican Party still reeling from a bitter March 19 election battle for governor, its most intense primary fight in decades.

Moreover, Democrats are sure to exploit the indictments as part of their argument that it is time for a change after a quarter-century of Republican control of the Executive Mansion--the longest GOP winning streak in races for governor in the nation.

Fawell, 44, of St. Charles was out of town Tuesday on vacation and couldn't be reached for comment. Last year, he complained to reporters about the investigation's slow pace, saying, "The bottom line is, at some point, they have to make a decision that if they want to do something with anybody, they ought to do something."

Fawell's lawyer, Edward M. Genson, said his client would plead not guilty to the charges. A statement from the Metropolitan Pier and Exposition Authority said Fawell, who was appointed its chief executive by Ryan in early 1999, began a leave of absence, effective Tuesday.

Ryan's press secretary, Dennis Culloton, said the governor denied any knowledge of the government's allegations.

When he was asked whether the governor should have known of the alleged misdeeds of top aides, Culloton said, "First of all we should let all of this be played out in court."

Juliano, 34, formerly of Park Ridge, resigned Friday as the Bush administration's liaison at the U.S. Transportation Department. He worked extensively in the secretary of state's office and was campaign manager for Citizens for Ryan in 1994 and deputy campaign manager in 1998.

According to his lawyer, James Montana, Juliano has spent "at least 20 hours" in interviews, providing information to prosecutors and federal agents. In an appearance Tuesday before the federal grand jury, Juliano read an "extensively detailed" 16-page statement, Montana said.

Stanley, who was not charged, couldn't be reached for comment Tuesday.

Beverly Fawell didn't answer the door of her home to talk to a reporter.

Among key convictions in the Safe Road probe was Dean Bauer, a former top Ryan aide and close friend handpicked to root out corruption in the secretary of state's office who instead admitted he obstructed justice to try to protect Ryan from political embarrassment.

The charges

Scott Fawell, Gov. Ryan's ex-chief of staff: racketeering, theft of government funds, conspiracy to obstruct justice, perjury, two counts of mail fraud and four counts of filing false tax returns.

Richard Juliano, ex-Fawell aide: mail fraud.

Citizens for Ryan: racketeering, theft of government funds, conspiracy to obstruct justice and two counts of mail fraud.

- - -

A key aide's alleged pattern of corruption

Scott Fawell, the former chief of staff during George Ryan's tenure as secretary of state, was indicted on Tuesday for allegedly engaging in a pattern of fraud and corruption between 1993 and 1999. The federal indictment alleges that Fawell fraudulently used secretary of state employees for political fundraising for Ryan and others.

CHRONOLOGY OF SELECTED RACKETEERING ALLEGATIONS

March 1994 primary campaign

Fawell allegedly diverted secretary of state employees and resources to assist in campaign efforts for a state senator who served in the Illinois Senate from 1983 to 1998.

Ryan's 1994 race for re-election

Fawell and others allegedly directed state employees to perform campaign work on state time; they also are accused of fraudulently diverting state assets to benefit Ryan's campaign fundraising committee.

February to June 1995

Fawell allegedly fired two secretary of state employees and reassigned at least five more who were investigating allegations of official misconduct.

Spring 1995 to February 1996

Fawell allegedly arranged for state employees to work for the campaign of a Republican 1996 presidential primary candidate who was endorsed by Ryan. He then allegedly arranged for a separate company to compensate himself and others.

August to November 1996

Fawell allegedly authorized state employees to serve as campaign coordinators, using state time and resources, for select races for the Illinois House of Representatives. He allegedly arranged for a separate company to pay himself and others about $100,000 for campaign work.

February to August 1998

Fawell is accused of obtaining full-time work on Ryan's 1998 gubernatorial campaign for employees on the state payroll. State funds allegedly were used to buy supplies and equipment for campaign use.

September 1998

Fawell and others are accused of directing employees to destroy documents and computer records relating to grand jury investigations into their offices.

October 1998

Fawell appeared before a federal grand jury and allegedly committed perjury in giving false testimony about his knowledge of fundraising activities.